8-K: Bank First Corporation Announces Board Changes, Strong Q1 Earnings Despite Deposit Pressures

Bank First Corporation reports a strong first quarter with increased earnings per share, despite facing challenges from deposit competition and increased interest expenses.

Summary

• Bank First Corporation released its quarterly shareholder newsletter on May 20, 2024, highlighting first quarter financial results and board changes.
• The company's total assets decreased to $4.10 billion as of March 31, 2024, from $4.17 billion the previous year.
• Net loans increased to $3.34 billion, a $59 million year-over-year growth.
• Deposits decreased to $3.42 billion, a $47.2 million year-over-year decline, due to increased competition for deposits.
• Earnings per share for the quarter ended March 31, 2024, was $1.51, up from $1.09 in the first quarter of 2023, which was impacted by one-time acquisition costs.
• Net interest income before provision for loan losses increased to $33.3 million, a $1.1 million increase year-over-year.
• The company's ownership stake in Ansay & Associates has increased by more than 700% since 2009.
• The Sheboygan office has grown to become the bank's largest, with nearly $500 million in loans.
• A quarterly cash dividend of $0.35 per common share was approved, payable on July 10, 2024.
• Total shareholders equity increased by $46.9 million to $609.3 million at March 31, 2024.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with strong earnings and strategic growth, but also acknowledges challenges with deposit competition and increased expenses. The overall tone is optimistic but realistic.

Positives

• Earnings per share increased significantly year-over-year, from $1.09 to $1.51.
• Net loans experienced solid growth, increasing by $59 million.
• The company's investment in Ansay & Associates has yielded substantial returns, with a 700% increase in value.
• The Sheboygan office has become a major contributor to the bank's loan portfolio.
• Shareholder equity has increased by $46.9 million.
• The company has a strong asset quality metrics with a $0.6 million net recovery of previously charged-off loan balances.
• The appointment of Erin A. Davis to the board brings a fresh perspective and strengthens the board's diversity.
• The company is expanding its physical presence with a new office in Fond du Lac.

Negatives

• Total assets decreased from $4.17 billion to $4.10 billion year-over-year.
• Deposits decreased by $47.2 million year-over-year, indicating competitive pressures.
• Increased interest expenses nearly matched the increase in gross interest income, impacting net interest margin.
• Non-interest income decreased due to the sale of UFS, LLC and negative valuation adjustments to mortgage servicing rights.
• Non-interest expenses increased by 10.7% period-over-period, excluding one-time transaction expenses.
• The company experienced a decline in full-time equivalent employees from 389 to 361.

Risks

• The company faces increased competition for deposits, which is impacting deposit balances and increasing interest expenses.
• The decline in deposits could lead to further pressure on the net interest margin.
• The loss of revenue from UFS, LLC will continue to impact non-interest income.
• Increased data processing costs are contributing to higher non-interest expenses.
• The company is exposed to fluctuations in the value of mortgage servicing rights.

Future Outlook

The company is focused on managing deposit competition and maintaining profitability. The new Fond du Lac office is expected to open in late 2024.

Management Comments

• Bank First's promise is to be a relationship-based bank focused on providing innovative solutions that are value-driven to the communities we serve.
• The partnership between Bank First and Ansay & Associates has been very successful.
• The Bank has been very fortunate to have Mike Ansay and Dave Sachse on our Board of Directors over the years.
• We are delighted to welcome Erin to the Board of Directors.
• Erin brings a fresh perspective and unique skill set that will enrich our discussions and decision-making at the Board level.

Industry Context

The document highlights the challenges faced by banks due to the decrease in monetary liquidity following the COVID-19 pandemic, leading to increased competition for deposits and higher interest expenses. This is a common trend across the banking industry.

Comparison to Industry Standards

• While Bank First experienced a decrease in deposits, this is a common trend across the banking industry due to the reduction in monetary liquidity after the COVID-19 pandemic, similar to what other regional banks are experiencing.
• The increase in net interest income is a positive sign, but the increase in interest expenses is a concern, similar to other banks facing increased competition for deposits.
• The growth in net loans is a positive indicator of the bank's lending activity, which is a key driver of revenue for banks.
• The increase in earnings per share is a positive sign of the bank's profitability, which is a key metric for investors.
• The 700% increase in the value of the Banks ownership stake in Ansay & Associates is a unique success story, demonstrating the value of strategic partnerships.

Management Changes

Related Party Transactions

• The document highlights the ongoing relationship with Mike Ansay and his family through Ansay & Associates, noting the significant financial returns and business referrals.

Stakeholder Impact

• Shareholders will benefit from the increased earnings per share and the quarterly dividend.
• Employees may be impacted by the decrease in full-time equivalent employees.
• Customers will benefit from the new Fond du Lac office and the company's focus on customer experience.
• The community will benefit from the company's continued investment and job creation.

Next Steps

• Shareholders are encouraged to attend the Annual Shareholder Meeting on June 17, 2024.
• Shareholders are reminded to vote their shares online, by telephone, or by returning their proxy card.
• The company will continue to monitor and manage deposit competition and interest expenses.
• The new Fond du Lac office is scheduled to open in late 2024.

Key Dates

Keywords

Bank First Corporation, Financial Results, Shareholder Newsletter, Board of Directors, Earnings Per Share, Net Loans, Deposits, Net Interest Income, Dividends, Ansay & Associates, Sheboygan, Fond du Lac